For Asia-Pacific Economic Cooperation (APEC) member economies, the 2023 APEC summit in San Francisco is a vital forum. It is taking place at a time when US-China relations are more about crisis prevention than enhanced cooperation. It also comes amid a backdrop of rapidly growing demand for digital connectivity, with pressure on governments to “bounce back” from the disruption caused by the Covid-19 pandemic and pursue avenues for sustaining economic growth and delivering prosperity to their populations. While the summit may not be a panacea for all these challenges, grounds for cautious optimism among APEC member economies exist.
Attention has undeniably been focused on the meeting between US President Joe Biden and Chinese leader Xi Jinping, heralded by some as a potential thaw in US-China relations. Beyond the diplomatic optics, the presence of both leaders at APEC signals a mutual acknowledgment of the interdependence between their economies and those of the APEC region – hence a willingness by both sides to "return to the table". Substantial trade volumes underscore this interdependence; the US engaged in approximately $4 trillion worth of trade with APEC in 2022, while China's trade volume with the region reached $3.1 trillion.
The meeting also potentially indicates a shared commitment by the US and China to dialogue and cooperation within the multilateral rules-based system and with APEC member economies on economic issues. To regional governments who fear getting caught in the crossfire of US-China tensions, the Xi-Biden meeting within the institutional framework of APEC ought to offer reassurance that both superpowers have some room for mutual dialogue, at least for the time being.
Given the importance of the digital economy to national and regional economic growth, enhancing digital connectivity has become a focal point for APEC. The ongoing implementation of the APEC Internet and Digital Economy Roadmap, facilitated through the Digital Economy Steering Group (DESG), is commendable. APEC, via the DESG, seeks to synchronise regulatory frameworks and standards across its member economies to ensure their interoperability and foster more digitally enabled trade. Many APEC member economies have now introduced digitalised processes such as the electronic submission of customs declarations or digital payment of customs duties.
However, where progress has been made, challenges also loom – particularly in areas such as data privacy and the flow of data across national borders. Data-related initiatives are expected to pose potential problems for APEC – such as in 2022 when the DESG reported that activities associated with APEC's Cross-Border Privacy Rules certification scheme had had a negative effect on consensus-building within the grouping. How challenges like this are resolved remains uncertain and will likely be an important point of discussion at the summit.
Long-Term Sustainability and Resilience
Long-term sustainability and resilience have also emerged as critical concerns for APEC member economies in the post-pandemic era. These concerns extend beyond global supply chains and trade networks to encompass the energy and services sectors. While APEC provides guidelines and conducts proceedings through its working groups and Steering Committee on Economic and Technical Cooperation, member economies grapple with challenges in their recovery efforts. Uneven growth, inflation, trade protectionism, geopolitical tensions and climate change constitute a formidable array of challenges. While regional economies are expecting sustained growth in tourism and consumption, they also face long-term uncertainties such as ageing populations, economic inequality and social divides. APEC, as a collective entity, must vigilantly monitor and work to address these areas to ensure the long-term prosperity and resilience of its member economies. The 2023 San Francisco summit should serve as an indicator of APEC’s ability to provide a platform for deliberation and collaboration aimed at overcoming these multifaceted challenges.